Shares - Corporate Action - wibble

[simpo two]

Some years ago, well OK, just before the tech market went pop, I bought some shares in Agilent Technologies via Sharepeople (now Amex). Today I got this out of the blue:

Amex said:

I write with regard to your above holding and inform you that the Company is acquiring up to 73,000,000 of it's own shares by way of a Purchase Offer. The Purchase Offer will be conducted via a "Dutch Auction" process whereby holders who wish to proceed in the Purchase Offer should state at which price they would like their shares to be purchased (tendered) between a given price range. The price per share range in this instance is between $32.00 and $37.00, and tenders should be in multiples of $0.25. The Company will determine the price at which it will acquire tendered shares. The price will be known at the Determined Price. Shares tendered at or below the Determined price will be accepted, subject to proration. Shares tendered above the Determined Price will be rejected. The following options are available to you and we would be grateful to receive your written instruction by 9th December 2005. (1) Holder to specify the per security price they wish to receive. (2) Holder accepts the price determined by the Company. (3) Take no action. If we do not receive you instruction by 9th December 2005 we will take no action. Please note that a third party fee will be payable to process your instruction (except where you instruct us to take no action). The amount of the fee will depend upon the number of valid instructions received, but will not be more than US$30.00. The fee will be debited from your account with the following description: C/A 3RD PTY FEE.

So if I tender a low price they'll buy them from me; if I tender a high price they won't and I get to keep the shares - is that right? What happens if I do nothing?

Does anyone have any advice as I'm a bit in over my head here.

Thanks

>> Edited by simpo two on Thursday 1st December 18:16

[randlemarcus]

If I recall correctly,(but am open, as always, to discussion), then it goes like this:
You decide you want $10 for your shares, but Bob across the road wants only $9 for his.

The company decides to pay $9.50 for the shares (the Determined price), so Bob gets $9.50 for his shares.

You, on the other hand, were being greedy, so you get to keep your shares. On the other hand, the shares are now definitely worth $9.50, so you should be able to get around that on the open market, and the chances are, if a company is doing a big buyback, its for a good reason, which is fairly unlikely to be a firesale type thing....

[Whoozit]

Without commenting on the merit of the buyback price, it's also worth considering that the remaining shares each have a higher pro rata share of the company's earnings and assets - usually earnings per share increase after a buyback.

It's a common method for companies with excess cash to use to buy back shares in the US market.

[simpo two]

Thanks guys - looks like I might be best off sitting on them. I paid $54 for them anyway!